v3.26.1
Note 13 - Income Taxes
 12 Months Ended
Dec. 31, 2025
Notes to Financial Statements  
Income Tax Disclosure [Text Block]

Note 13 — Income Taxes

 

Restatement in the income taxes account relate to the unwinding of the Company's accounting for its captive insurance subsidiary as discussed in Note 1 — Restatement of Previously Issued Financial Statements.

 

The components of income before income taxes are as follows:

 

  

Year ended December 31,

 

(in thousands)

  2025   2024   2023 
     

(As Restated)

  

(As Restated)

 

Domestic

 $37,425  $53,971  $63,176 

Foreign

  (1,284)  (490)  20 

INCOME BEFORE INCOME TAXES

 $36,141  $53,481  $63,196 

 

Significant components of the Company’s deferred income tax assets consist of the following:

 

  

December 31,

 

(in thousands)

  2025   2024 
     

(As Restated)

 

Deferred income tax assets (liabilities):

        

Net operating loss

 $10,117  $10,013 

Accrued expenses

  2,453   2,136 

Bad debt reserve

  2,141   2,183 

Lease liability

  222   528 

Stock options and restricted stock

  1,021   1,607 

Unrealized gain

  226   239 

State taxes

  35   23 

Amortization

  (3,110)  (363)

ROU assets

  (204)  (491)

Total deferred income tax assets

  12,901   15,875 

Valuation allowance

  (10,592)  (10,252)

DEFERRED INCOME TAX ASSETS, NET

 $2,309  $5,623 

 

The Company recognizes a valuation allowance against deferred tax assets to the extent that it believes that the deferred tax assets are not more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, and results of recent operations. If the Company determines that it would be able to realize its deferred tax assets in the future in excess of their net recorded amount, the Company would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. 

 

The provision for (benefit from) income taxes consists of the following:

 

  

Year ended December 31,

 

(in thousands)

  2025   2024   2023 
     

(As Restated)

  

(As Restated)

 

Current:

            

Federal

 $1,911  $12,755  $10,790 

State and local

  3,037   3,806   4,452 
   4,948   16,561   15,242 

Deferred:

            

Federal

  3,414   (1,389)  842 

Foreign

  (170)  —   — 

State and local

  70   186   538 
   3,314   (1,203)  1,380 

PROVISION FOR INCOME TAXES

 $8,262  $15,358  $16,622 

 

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes after the adoption of ASU 2023-09 is as follows:

 

  

Year Ended December 31, 2025

 
  

Amount

  

Percent

 
  

(in thousands)

     

U.S. federal income tax benefit at statutory rate

 $7,590   21.0%

State and local income tax, net of federal benefit

  2,335   6.5 

Foreign tax effect

  —   — 

Effect of cross border tax laws

  —   — 

Valuation allowance

  501   1.4 

Non taxable items:

        

Stock-based compensation

  588   1.7 

Permanent difference

  12   — 

Warrants

  —   — 

Tax credit:

        

Solar credits

  (5,312)  (14.7)

Penalty and interest

  2,930   8.1 

Others

  (327)  (1.2)

Changes in unrecognized tax benefits:

        

Unrecognized tax benefits

  (55)  0.2 

Balance at end of period

 $8,262   23.0%

 

A reconciliation of the provision for income taxes to the amount computed by applying the 21% statutory U.S. federal income tax rate to income before income taxes for years prior to the adoption of ASU 2023-09 is as follows:

 

  

Year ended December 31,

 

(in thousands)

  2024   2023 
  

(As Restated)

  

(As Restated)

 

U.S. federal income tax benefit at statutory rate

 $11,231  $13,271 

State and local income tax, net of federal benefit

  3,165   3,931 

Penalty and interests

  1,616   226 

Valuation allowance

  183   (159)

Stock-based compensation

  (197)  (812)

Others

  (640)  165 

PROVISION FOR INCOME TAXES

 $15,358  $16,622 

 

The Company includes certain entities that are not included in the Company’s consolidated tax return. The entities have separate U.S. federal and state net operating loss carry-forwards of $37.9 million that begin to expire in 2025. Net operating loss carry-forwards in the amount of $34.0 million related to Prism may be subject to Internal Revenue Code Section 382 limitation at the time of utilization. 

 

The change in the valuation allowance for deferred income taxes was as follows: 

 

  

Balance at beginning of period

  

Additions charged to costs and expenses

  

Deductions

  

Balance at end of period

 
  

(in thousands)

 

Year ended December 31, 2025

                

Reserves for valuation allowances deducted from deferred income taxes, net

 $10,252  $340  $—  $10,592 

Year ended December 31, 2024

                

Reserves for valuation allowances deducted from deferred income taxes, net

 $10,069  $183  $—  $10,252 

Year ended December 31, 2023

                

Reserves for valuation allowances deducted from deferred income taxes, net

 $10,228  $—  $(159) $10,069 

 

As of December 31, 2025 and 2024, the Company maintained a valuation allowance on the deferred tax assets of net operating losses relating to consolidated U.S. entities and its Israel entity.

 

The table below summarizes the change in the balance of unrecognized income tax benefits:

 

  

Year ended December 31,

 
  

2025

  

2024

 
  

(in thousands)

 

Balance at beginning of period

 $111  $183 

Additions based on tax positions related to the current period

  56   18 

Additions based on tax positions related to prior periods

  —   — 

Lapses of statutes of limitations

  —   (90)

Balance at end of period

 $167  $111 

 

All of the unrecognized income tax benefits at December 31, 2025, 2024 and 2023 would have affected the Company’s effective income tax rate if recognized. The Company expects the total amount of unrecognized income tax benefits to significantly decrease within the next twelve months. 

 

In the years ended December 31, 2025, 2024 and 2023, the Company recorded interest and penalty expenses of $2.9 million, $1.6 million and $0.2 million, respectively, and have included the amounts in income taxes payable.

 

The Company currently remains subject to examinations of its tax returns as follows: U.S. federal tax returns for 2022 to 2025, state and local tax returns generally for 2020 to 2025 and foreign tax returns generally for 2012 to 2025.

 

The amounts of cash income taxes paid by the Company for the year ended December 31, 2025 were as follows (in thousands):

 

Federal

 $4,800 

State and local

    

Connecticut

  475 

New York

  475 

Pennsylvania

  325 

Others

  920 

Income Taxes, net of amounts refunded

 $6,995